The office of outgoing New York City comptroller Brad Lander has said BlackRock is taking an overly conservative approach to engaging with US firms and that its stewardship reporting is not detailed enough.

On Wednesday, Lander recommended that three of the city’s public pension systems terminate a $42 billion US public equity index mandate with BlackRock, as well as smaller mandates with Fidelity Investments and PanAgora Investments, over “inadequate decarbonisation plans”.

His recommendation followed an evaluation of the pension systems’ 49 public market managers, the remaining 46 of which met their climate expectations, including how they actively engage with portfolio companies to mitigate climate risk.

Climate stewardship

Lander said his office had focused its evaluation of BlackRock’s decarbonisation efforts on its public equity stewardship on behalf of the systems, and in a report published on Wednesday sets out in detail what it wanted from the manager.

The office highlighted that BlackRock has “bifurcated” its climate stewardship approach with “two co-existing but at times contrasting policies”.

The investment giant offers a climate and decarbonisation policy (CDS) in addition to its benchmark stewardship policy. The former offers “more comprehensive” climate stewardship such as setting science-based targets and measuring material Scope 3 emissions.

The office claims that “until recently, BlackRock was unwilling to allow clients, including the Systems, to opt into its CDS policy unless the client delegated its proxy voting to BlackRock”.

But in a “welcome change”, the manager has changed its position and decided other clients can also opt into the CDS policy.

According to BlackRock’s 2025 Global Voting Spotlight, as of 30 June, total funds and separately managed accounts that have chosen to apply the CDS proxy voting guidelines represent $158 billion of client index equity asset under management, “or approximately 2 percent of our clients’ total public equity AUM”.

US firms and SEC guidance

However, a key remaining concern for Lander was what he called BlackRock’s “restrictive” approach to engagement with US listed firms where it owns more than 5 percent of shares.

In February, the US Securities and Exchange Commission (SEC) published new guidance which requires more onerous ownership reporting from large shareholders under certain circumstances.

The SEC also withdrew an explicit note that engagement on executive compensation or other ESG issues “would generally not” trigger a 13D filing.

Initially, in response to the SEC’s move, BlackRock paused corporate engagements to digest the rule change.

However, it later told Responsible Investor that it had restarted corporate conversations. At the time it said that to ensure compliance, it will highlight its role as a passive investor at the start of each engagement. “BlackRock does not use engagement as a way to control publicly traded companies,” a spokesperson added.

According to Lander’s report, BlackRock has said it will not reach out “proactively” to these US companies individually “as it relates to proxy voting issues (including director elections) except in narrow circumstances (proxy fights or material M&A votes)”.

The report claimed BlackRock had said it will not “set agendas for engagement” or seek to influence companies’ actions. The Comptroller said BlackRock’s “conservative” interpretation of the SEC rules meant it was unable to meet the New York City funds’ expectations regarding engagement.

Lander acknowledged some of the broader challenges around the new SEC rules, saying that BlackRock’s rationale is not “simply a matter of filing a longer, more complicated form”.

The report said BlackRock had explained that filling in a 13D form could “materially affect its ability to execute index investing for its clients”.

For example, filing a 13D requires a 10-day pause in trading, which would prevent BlackRock from buying or selling the security in order to maintain the index exposure to it, “potentially leading to tracking error during that period”, Lander’s report said.

Regulators in certain sectors such as banks, insurers and utilities also use the SEC’s definition of passivity.

According to the Comptroller, BlackRock explained that if it were to file 13Ds at these companies it might have to take other actions such as selling down a position to get below the threshold.

While acknowledging that BlackRock’s explanation is “plausible,” Lander noted other comparable firms take “a less constraining” approach. He directly compared it to fellow US giant State Street, which is also the systems’ second largest manager.

According to the Comptroller, State Street’s stewardship service has a “much more robust” approach to climate engagement with US companies than BlackRock.

In March, State Street pared back and removed guidance on how it may vote on certain topics. It also added a disclaimer that it “does not seek to change or influence control of any portfolio company through engagement”.

At the time a spokesperson for State Street declined to comment when asked if there was a link between the changes to its voting and engagement policy and the new SEC rules.

BlackRock report

BlackRock declined to comment on the Comptroller’s view on its climate stewardship approach.

According to the manager’s report in the 2024-25 proxy year, BlackRock Investment Stewardship (BIS) held more than 2,500 engagements with members of the boards and management teams of companies.

Its split by geography does not provide specific number on US engagements, but says the manager has engaged 943 firms in the Americas, which comprises seven markets.

In the CDS 2025 stewardship summary report, BlackRock said it engaged 137 companies globally, “primarily operating in the energy, materials, industrials, and financials sectors”.

Both reports also pointed to the SEC’s guidance, stating: “We comply with the requirements and do not use engagement as a way to control publicly traded companies.”

Meanwhile, Lander also noted that BlackRock has not restricted stewardship actions with regards to non-US firms, where the SEC regulations do not apply.

“Two-thirds of the 900 companies on their CDS focus list are outside the US, so with non-US companies, BlackRock is sufficiently fulfilling the systems’ climate expectations for their managers.”

For that reason, the Comptroller recommended that the systems retain BlackRock for its non-US equity index mandates and formally vote to join the CDS so BlackRock can engage those non-US companies.

Engagement reporting 

Lander also claimed that BlackRock’s stewardship reporting is “very high-level” and “does not provide specifics about engagement outcomes, with the exception of limited anecdotal ‘spotlight’ columns in their annual stewardship report”.

The quality of manager stewardship reporting is a key focus for asset owners.

In the report, the Comptroller noted that BlackRock will provide enhanced reporting in the future “but will not attribute credit to BlackRock for any outcomes for US companies in which it owns 5 percent”.

In its report, BlackRock said: “Setting, executing, and overseeing strategy are the responsibility of management and the board. As one of many minority shareholders on behalf of our clients, BlackRock does not direct a company’s strategy or its implementation.”

Investors have been increasingly thinking about how to measure engagement outcomes and evidence their contributions, however some have raised concerns about claiming impact.

BlackRock mandate response

While declining to comment on the specifics around climate stewardship, BlackRock in a statement pushed back against Lander’s recommendation to drop the $42 billion mandate.

In a letter to the comptroller, Armando Senra, head of the Americas institutional business at BlackRock, described Lander’s statements as “another instance of the politicisation of public pension funds, which undermines the retirement security of hardworking New Yorkers.”

Senra added that if the Comptroller’s recommendations are taken up, BlackRock “look[s] forward to demonstrating the breadth and depth of our capabilities and the tremendous value we deliver to NYC BAM and 750,000 dedicated public servants.”